Plan Like You’re Dying

October 2, 2013 08:48 AM

Strength of rural communities hinges on succession

With a long legacy of family members at the helm of The Callaway Bank, Bruce Harris (left) set up the rural bank for future success with the support of his father, Overton Harris, and uncle, John C. Harris. Photo: Tim Brown

The doctor says, "you have Stage 4 cancer and about three months to live." Those words set the succession planning wheels in motion for Bruce Harris, former president of The Callaway Bank—the oldest independent community bank in Missouri.

At the age of 52, Harris quickly came to terms with his mortality and asked the bank’s board of directors and employees to do the same. "He was very pragmatic about the process," recalls Kimberly Barnes, who now serves as president and CEO. "Bruce asked the board to outline and implement a succession plan with his input."

With a long history of promoting individual growth within, the board of directors quickly began an internal search to find Harris’ successor.

Since the late 1800s, a Harris family member has held the bank’s reins. This caused a great deal of chatter in the rural community and among employees about who the next successor would be and what would happen to the bank.

"After hearing some of the chatter, Bruce sat the bank’s employees down and said, ‘the bank is bigger than the Harris family; it’s you, the employees, whom our customers have come to know and rely on,’" Barnes says.

The board set aside the premise that Harris’ successor had to be a family member, even though a few are still employed by the bank.

"It’s not healthy for so much to revolve around one person," Barnes says. "The organization needs to be self-sustaining." It was important for the board to lead the process and be transparent, which illustrated that the bank was more than one person.

"When a company relies on a community to keep its doors open, it owes them; it must give back."

In the end, it also provided people with confidence in the outcome because it was a process. In its search, the board was very realistic, analytical and calm, Barnes says. They reviewed the candidates’ backgrounds, resumes, skill sets and future abilities.

Barnes, who at the time served as chief operating officer and executive vice president of Callaway Security Banks Inc. (the holding company), was selected to be Harris’ successor.

From that point forward, Harris and Barnes were joined at the hip.

It was her job to absorb as much information as possible, and Harris quickly moved into the teaching role.

"We had regular meetings on the calendar to discuss priorities," Barnes says. "We both set aside our egos and became one; we spoke with one voice within the company and externally." While she acknowledges they both knew they would handle certain situations differently, they agreed it was important to speak and act as a team.

Accept Change. "It was Bruce’s attitude about the transition that helped everyone be comfortable with it," Barnes says. "Change was OK. When Bruce wasn’t there because of treatments, there was no one wondering what was going to happen or what should be done—it was a seamless process."

Fortunately, the doctor’s timeline was wrong, and Harris lived for five years, allowing for greater transfer of knowledge and a comfortable ease into the position. The urgency up front and the extra time as a team really helped, Barnes says.

The Callaway Bank’s leadership has long understood its relationship with the community. It’s very much a symbiotic relationship. "When a company relies on a community to keep its doors open, it owes them; it must give back," says Debbie LaRue, vice president and director of public relations and marketing at the bank. "We know that the ability to get access to credit is crucial at certain times. We have to know what our customers face every day. When the community does well, we do well."

Today, the bank employs 140 central Missouri residents and holds more than $292 million in assets. More than 25% of the bank’s loan portfolio is secured by farmland or to finance ag production and ag-related businesses. In 2012, the bank loaned more than $121 million, with $89 million being new money.

The success and sustainability of the bank allow it to support local businesses through financing with competitive rates and terms, focus on education through scholarships and involvement in youth activities, and donate to charitable causes for the good of the community.

Just as the bank relies on its community and residents on the bank, America’s rural communities rely on the succession plan of farmers, and farmers depend on access to goods and services provided by businesses within those communities.

Farmers Needed. "Farm families continue to be the backbone of rural communities, and they recognize that contribution by donating to local charities, giving back to the community and helping the next generation," says Paul Lasley, Iowa State University rural sociologist. In a recent study, 58% of farm families surveyed report that it is important to give back to the community.
"In small towns, city boundaries don’t mean much," Lasley says. "Businesses depend on farmers, and farmers and their families can find off-farm work, whether it’s at the bank, school, dentist or coffee shop."

America’s rural economy and way of life is something that needs to be protected and cherished, says Barnes. Farmers and agricultural businesses play a vital role in keeping the health and wealth of their communities.

The lesson? Put a succession plan in place for your family and employees, and also to support and preserve your community—America’s rural heritage. Plan as if you were dying.

Tackle Transparency

People need to feel informed and have confidence in the process and the future of the business, whether it’s a farm or a community bank.

It’s incredibly important to maintain or enhance the relationships within the family during a transition, says Lance Woodbury, a succession planning consultant. "Keep the family informed, updated and ask for input," Woodbury says. "In the absence of a good story, people make one up."

Even on the farm, if you don’t communicate and make your intentions clear, they are left open to interpretation, and everyone’s interpretation will be different, he says. Discuss it; keep people on the same page.